Saturday, December 17, 2005

The Public Resources Corporation

Heh, after writing last week's blog, I find myself wanting to describe the same concept from a different perspective.

The Public Resources Corporation would be chartered by the federal government. It's shareholders would consist of all adult citizens at the time of its inception. Each citizen would be granted a single share in this corporation. Once every citizen (child or adult) at the time of the chartering had his single share, the shares would be fixed. No new shares could be issued for sale, or to grant to any individual for any reason. Share numbers would be adjusted from time to time, but this would only be to make accounting easier (multiplying shares to make fractional shares whole--see below), not to rearrange the ownership.

All land owned by the federal government would be transferred to the PRC. The government would retain rights to said land, but would start having to pay rent to the PRC for control of this land (see below). The government would also retain the authority to sell their rights to any individual. The PRC would retain ownership of the land, but the rent would now be paid for by the new rights-holder.

What the PRC would do

The PRC would retain ownership of all the natural resources in its possession--it would never sell it to anyone. However, it would register rights to control natural resources, and charge rent for that right. Once a parcel of land (or band of electromagnetic spectrum, or rights to below-ground resources, or whatever other beneficial natural resource monopoly could be thought up) was purchased, the rights to that natural resource could not be transferred to a new rights-holder except with permission of the rights-holder. In return for absolute control over the given natural resource, the individual would pay a percentage of the market value of that resource to the PRC as rent, on a yearly basis. The PRC would own only natural resources, ie. things not created through human effort. Capital improvements (buildings, etc.) would belong to the individuals that created them, or those to whom they sold them. No rent would be charged based upon improvements to a parcel of land; only the land itself could be the basis of resource value calculations. How the calculations could be done will be the subject of a future article.

The only time a rights-holder could be deprived of his rights is in the event that he could not pay the rent, in which case just enough of the resource would be removed from his possession to cover the bill. Upon being without a proper owner, the resource would be open to public use, the precise rules for which would be decided by the board of directors, elected in the usual fashion (one vote per share). An example I would suggest is that unallocated land could be traveled upon or harvested from (food, timber, minerals, etc), so long as no harvesting tools or transportation equipment (vehicles) that use a non-living source of energy are used (ie no chainsaws, no cars, no tractors; only human or animal muscle). The construction of an enclosure (fence, building, etc), the claiming of the rights to decide what can and cannot be done on a plot of land, or the use of powered equipment would constitute a claim on the land, and the individual doing so would then be subject to rent costs for the area utilized for that year. An individual could disavow their claim to escape the following year's rent, though it would likely be more profitable for them to sell it to someone else who wants it.

Note that this entity would be separate from the government. As such, even the government would have to pay rent to maintain their facilities on public land. This would include any and all land the federal government maintains roads on (the interstate system, but again, they would be charged only for the space, not for the space plus the construction on top of the space). It should also be noted that any property taxes charged by the government would be collected from the rights holder, not from the PRC..

The PRC would have only three things it was allowed by its charter do with the money. The first thing would be administrative costs--the costs of collecting and disbursing the rent on natural resource monopolies. The board of directors would decide how much of the revenues is needed to accomplish this. The second would be direct payment of dividends to shareholders. The third would be the funding of a program to purchase additional, privately held land, until such time as all the natural resources of the country were owned by the PRC. The revenues remaining after administrative costs would be divided between these two purposes according to the percentage of the country's known natural resources owned by the PRC; if the PRC owns x percent of the country's known natural resources, x percent would go to the shareholders; the remainder would go to the purchase program. Obviously, once the PRC owned 100%, 100% would go to the shareholders.

The purpose of all this is to ensure that wealth goes only to those that deserve it, not those that merely inherit wealth. Wealth acquired through labor is obviously deserved. Wealth acquired through investment of capital (itself a valuable kind of labor) is also deserved; it takes brains to invest wisely, and capital growth benefits all. An unworthy heir of capital will typically end up spending more than he earns, and thus the undeserved wealth ends up in the hands of others. But the person who's wealth comes from exclusive control of natural resources--land deeds, etc.--can simply sit back and watch his wealth grow (as land goes up in value with population density), collect rent from those that use his land, and buy more with the profits, until this effect results in inequalities that are not only dangerous, but unjust as well. By making landholders pay rent to everybody else for their control, you prevent this from occurring

Allocating the Next Generation's Shares

When a child is born, that child would become instantly entitled to 1/x + 1/y shares from his biological father and mother, regardless of whether the father or mother was married, or even possessed custody of the child. x is the number of children fathered by the child's biological father plus one (for the father), while y is the number of children born by the mother plus one (for the mother). That share would be removed from the shares possessed by the father or mother, and until the time of the child's majority (reaching 18 years or otherwise emancipated from the family), the person having custody of the child would receive the dividens paid by The PRC.

As the adult continued to have children, the shares would be adjusted accordingly, so that each individual in a given family unit (the biological parent plus all biological children) would always have 1/x shares. Upon reaching 18 years of age (or otherwise emancipated), the child would gain possession of those shares outright. The birth of further children to a parent would no longer affect the number of shares the former child possessed.

Here are some examples to illustrate this principle.

Suppose you have a married couple with an only child. Each brought a single share into the marriage. Upon having the child, the child now has a single share--one-half of each parent's share. Each parent now has a half-share. When he reaches his majority, he will go into life with that single share, and the parents will go on with their half-shares--a single share between them.

If they had three children, each child would now have a half-share--two quarter-shares from each parent, while each parent would have a quarter-share. In a four-child family, each child's share would be two-fifths, each parent's one-fifth, and so on. Next, I'll illustrate a more complicated situation.

Suppose some jerk goes and knocks up some girl. Each of them has a single share to themselves. When the child was born, he would posses a single share--one half of each parent's shares. Assuming the father goes on his way, and does not stay to raise the child, he will go on with his half-share, and the mother would have her half-share, plus the whole share of her baby, for one and one half shares.

If she subsequently marries someone else, and has a child by her new husband (who has a single share and no children of his own), the first child would have a new share value. He would retain his half from his father, but the portion from his mother would be reduced to 1/3, making the child's total now 1/2+1/3=5/6. The mother's portion would now be 1/3. Her new child's portion would be 1/3 from the mother + 1/2 from his father (her husband), meaning he would also have 5/6. The father's share would be 1/2. The family total would be 1/3(mother)+1/2(father)+5/6(Child1)+5/6(Child2)=2 1/2 shares--one from husband, one from wife, and one-half from the jerk that knocked her up. The jerk's shares would never be reduced further due to her having more children by another man.

Suppose, instead, that the jerk wised up and ended up getting married himself (his wife coming in with a single share), while the girl continued to raise her baby and had no more. Suppose he then had two more children. His first child's share would now be 1/2(Mother)+1/4(father)=3/4. The single mother's total shares would be 1/2(her)+3/4(her child's)=1 1/4 to help her raise her baby alone. Meanwhile each of the former jerk's children each have 1/4(father)+1/3(mother)=7/12 of a share (a little over a half), while father's share would be 1/4, and mother's 1/3. Total for the family: 1/4+1/3+7/12+7/12=21/12=1 3/4

Now, suppose the young, single mother gave her baby up for adoption instead of trying to raise him herself. The baby would come with that single share (which would decrease as his parents had more children), and the revenues would go to the adoptive parent, or to the orphanage.

Every now and then, to simplify accounting, the stock would be split in whatever manner necessary to bring all people's share values into integer values. Supposing you've got a bunch of people who's shares are measured in 1/12ths, everybody would get more shares so that the person with 5/12 would now have 5 shares, the person with 1/2 would now have 6 shares, and the person with 2/3 would now have 8 shares.

When a person died, his share would be divided between his offspring. If he outlived any of his offspring, but they had offspring, that child's share would be divided evenly among the grandchildren. If he had no surviving descendents, his shares would be reabsorbed by the PRC.

You'll notice some interesting features in this system of inheritance. First, the children end up with more shares individually than either parent. This serves as a financial incentive for parents to actually raise their children, since the person that has custody has control over the child's share of the dividends. It also serves as a discouragement for accidental pregnancy, since the man that knocks up a girl and runs has much to lose from it. Given how easy it is to prove paternity these days, I doubt many would pass up the opportunity to claim their child's share.

You'll also notice that when they reach adulthood, the children come away with larger shares than their parents'. Hopefully, by the time their children are grown up, parents have developed skills and/or accumulated capital with which they can continue on without quite as much of a share of the public resources. (If the only skill they have is childrearing, foster parenting could be an option, as well.) The children, on the other hand, probably need extra money starting out. This enables them to continue their education, or acquire a loan to start a business, or even start their own families earlier (assuming they believe they'll be financially ready when their own children grow up).

Finally, upon reaching middle age, people would start inheriting their parents' shares, which would be helpful in retirement.

By fixing the shares at the inception of the corporation, and using the inheritance scheme rather than just giving every new adult a share, you provide an economic disincentive to out-of-control population expansion. A large family, once split up, would provide each individual with a smaller share of the public resources than a smaller family. To earn the same amount of wealth, they would have to perform more valuable labor (I consider capital investment to be a legitimate form of labor).

Finally, this could answer the issue of immigrants impacting public services. Because this new "welfare" would go only to shareholders, immigrants would not have access to it. Even their children, who would become citizens if born on American soil, would not also become shareholders. The only way to get their children a share of the resources would be to marry a shareholder--essentially, to marry into an American family. In the event that this results in a large underclass of immigrant families from a neighboring country being exploited by a shareholding minority, perhaps negotiations could be made to get the neighboring country to adopt a similar plan, and eventually merge the two PRCs.

In this way, the corporation could also extend into other countries some day. In return for a grant of all unallocated and/or government owned lands in that country, and the right to purchase more at market value, a median amount shares could be issued to each citizen of that country. Or, if another country had a PRC of its own, the two sides could negotiate terms for a merger, particularly if both had shareholders living on the other side of the border/ocean/whatever.

1 comment:

Aaron said...

Yes, it is a bit socialist, although in an anarcho-socialist way where it is a co-operative owned by the p[eople as opposed to the government that runs things. Although it offends environmental sensibilities at first, reading through the whole thing makes you realize that the people would be in charge of everything and could protect the environment as much as they wanted. Kudos.