Fracking and Citizens’ Basic Income: Bedfellows??

The good news: a Citizens’ Basic Income without taxes. The bad? It will be paid for by fracking. On 17th January, Misha Glenny started a FT article with a fairy tale which may yet be the world’s salvation.

Imagine a country where government welfare payments are generous and not under attack. A utopian kingdom in which all books are guaranteed to sell at least 1,000 copies because the state believes that every library – none of which are closing – should bring together the entire cultural output of the land. When its citizens venture abroad they are welcomed and loved, for they spend billions on aid for countries less fortunate than their own. Yet, despite all this opulence and generosity, their government owes a negligible amount of debt.”

The Financial Times does not do fairy tales. This is Norway. In the Book Resumé (see ‘pages’ on this blog) I cite Alaska as one of the places where something very like a Citizens’ Basic Income already operates. Alaska Norway, and Britain, all discovered oil in the 1970s, but they used it very differently. Licences having been granted cheaply, Mrs. Thatcher, and then Tony Blair gained popularity on tax cuts and government spending. Alaska used about 10% of the revenues to set up a Permanent Dividend Fund which pays a dividend to all residents of Alaska (including children) as though they were shareholders in Alaska plc. The purpose is quite different from a Citizens Basic Income, and the amounts were less than the CBI criterion of providing basic needs, even at peak oil production around 2000, but its effect on the behaviour of individual Alaskans has been much as one might expect with a small Citizens’ Income.

But one criticism of the Alaska PDF is that the state should have kept more than 10%. The oil supply is dwindling, and so are the dividends. Glenny exonerates  Britain as typical rather than exceptional in what hindsight reveals as a tragic waste. Norway , with a 67% stake in the oil company set up a sovereign wealth fund . This is much the same as the Alaska PDF, but much more comprehensive. Annually 4% is added to the Budget. The rest is invested abroad in stocks which will still be there when the oil runs out.

Not only has Norway been generous in aid initiatives in the developing world, Glenny says “The fund has also shielded Norwegians from the worst effects of the economic crisis, helping to sustain a welfare system that is beyond comparison with the rest of Europe”. Norway did not actually set up a dividend payable annually to all citizens as in Alaska, but in addition to the benefits in kind as per the ‘fairy tale’ above, all Norwegians are assured of comfort and financial peace of mind in their later years.

The Citizens’ Basic Income is gaining ground in Europe as an idea purely on ‘social justice’ grounds. There is to be a Referendum
on the principle in Switzerland
some time in 2014, initiated in a reaction to egregious bonus payouts among the highest paid. I approve of a CBI on these grounds, and I would have approved if Norway had used the sovereign wealth fund for this purpose. It would look very similar to the Alaskan scheme, even though the whole ethos behind it was very different. But for me there is a more important third motive.  I was ‘radicalized’ by the MIT ‘Limits to Growth study in 1972. Since then for me the overriding and urgent need has been for some way of allowing individuals, nations, economies, businesses, corporations, however people define themselves, to drop out of the economic growth rat race without putting themselves at a disadvantage. The CBI is an expression of this principle at an individual level, but it also needs to be applied as between nations. Misha Glenny acknowledges that the bonanza will be smaller than the original North Sea one, and is not problem free, but what could be more natural than to use this second chance not to squander shale gas, in the same way as Alaska or Norway, albeit for a different purpose in each case?

Readers of my blog post on 4.10.2013 will be puzzzled. If I did not regard fracking as an extremely serious mistake already, I would do so after watching this film:

Local consequences are bad enough, but a problem not much discussed is gas escape. Fracking releases gases, and there can be no guarantee how much is actually captured commercially. The estimates, not verified independently of the contractors, is that ‘only’ 4% and not more than 9% at most is lost into the atmosphere. A letter in the Financial Times from someone involved in the industry maintains that any escape greater than 2% would mean that shale gas was worse than coal in producing greenhouse gases. As the economic pressures intensify, it seems to me inevitable that less and less care will be taken to guard against this danger. There is not even a theoretical limit on the proportion which escapes. This may be scaremongering, but if a means can be found to back off from economic growth, why take what might become an appalling risk?

So why the Hell am I still talking about fracking as  some kind of salvation? The Alaskan experience is curious. Despite the prevalent ‘Tea Party’ ethos in an overwhelmingly Republican state, Alaska is now No. 1 on the GINI index! In other words it is the most egalitarian state in the USA (Some lists still put it at No.2, behind Utah). This may be sheer coincidence, but this is one of the social justice aims of the Citizens’ Basic Income. Hardly what the Republican powers that be intended. An admittedly more conjectural link, the oil production and hence the fund dividend peaked around, 2000. In the Presidential election that year, the Alaska Green Party gained 10% of the vote – in Tea Party Alaska! The notion of pure coincidence is spoiled rather by the Alaska State government’s re-drafting the meaning of ‘Political Party’ so as to exclude the Green Party from future elections.

We have an irresistible force meeting an immoveable post. The ecological case for an immediate moratorium on fracking, world wide pending independent tests is overwhelming. But the economic case for fracking is equally overwhelming. I am not in favour of shale gas. I just think there is no way – yet – of stopping it coming to a field near you. Other reports this week state that the EU has back-tracked on its greenhouse gas emission targets. Despite being a passionate ‘Warmist’, as our ‘denialist’ opponents call us, I do not join in the condemnation. Due to shale gas, energy prices in the USA have fallen dramatically. Until the need identified above for some way of dropping out of the rat race is a reality, the Tragedy of the Commons will rule.

Until the Citizens’ Basic Income (or something better which allows the idea of a steady state economy to make sense to millions) joins the fray, fracking is going to happen anyway whether we like it or not, and I don’t. But if it is unstoppable,  it might as well be used to make the CBI a reality, so that attitudes which make it possible to stop fracking eventually will come about. It is rather like being trapped in a forest fire, and escaping on the back of a leopard who will kill you as soon as she can. Scary stuff.

But one other thought. This would at least wreck Iain Duncan Smith’s workfare arangements.

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