Thanks for this letter written by John Seaton of Tasmania citing the “Alaska State Permanent Fund” from which regular annual Dividends have been paid to citizens of that American State and referring also to Norway’s “State Petroleum Fund”.
The Alaska Fund was created in 1976 by State Governor Jay Hammond with assistance from two Cabinet Ministers of the former “Social Credit” Government of the Canadian Province of Alberta. In Alberta the “Alberta Heritage Savings Trust Fund” was instituted in 1976 by the new Conservative Government of Premier Peter Lougheed which in 1971 had defeated the former “Social Credit” Government. (This latter term is used reservedly because during its long term of office from 1935 to 1971, having been initially obstructed by the Federal Government and betrayed internally at an early stage, it never implemented genuine Social Credit monetary policies.)
All of these jurisdictions, viz., Alaska, Alberta and Norway have formulated policies predicated on the assumption that the natural resources of their territories belong to the people of these areas, and that their populations are entitled to benefit from their exploitation.
The resource in all three cases was crude oil which was discovered in abundance and which found substantial demand via export markets. These Governments assessed royalties on these exports and reserved
this income for internal expenditures. In Alaska a combination of financing State expenses and direct Dividend payments to citizens was implemented. Taxation was virtually eliminated.
In 1957 and 1958 the Alberta “Social Credit” Administration brie y issued token Dividend payments to citizens and a later Conservative Administration made a single modest and widely misperceived Dividend payment in 2006. Socialist oriented Norway has used oil royalty revenues exclusively, I understand, to fund generous government programs.
In the “heydays” of high oil prices all of these jurisdictions prospered substantially because of their considerable revenue from the export of oil from their large natural reserves. The recent collapse in the price of oil has severely reduced their revenue from oil exports, and the Province of Alberta, i.e., now administered by a socialist government, has been incurring unprecedented large budget deficits in a desperate attempt to maintain delivery of services. The crucial point to make about all of these natural resource royalty and redistribution programs is that all of these levies are a cost of doing business and enter into the price-system as costs which, in final analysis, must add to prices.
It is a fundamental convention of industrial accountancy that all costs must be included in prices and that consumers, being at the final stage of the production- consumption cycle, must through their purchases liquidate all production costs. Contrary to the long- standing contention of orthodox economists, consumers increasingly do not have in their possession sufficient unattached financial income to purchase the full output of actual consumer wealth in any given accounting cycle—because in modern technological multi-stage production the ow of consumer incomes paid out is always decreasing relative to the ow of financial costs and prices.
Wages, salaries and industrial dividends are all both a costs of production and incomes in the hands of the recipients. However, total costs and prices for all enterprises are increasingly greater than incomes paid out as wages, salaries and dividends because materials and capital costs from previous costing cycles must be brought in to facilitate production and these items are allocated charges which are never incomes in the same costing cycle.
They represent previous wages, salaries and dividends which have already been spent on past production and cancelled when the producer repays his line of credit with the bank or restores his reserves. They never again will become consumer income until re-issued for a new cycle of production which will produce not only new goods but also a whole new and additional set of costs and prices.
What this means is that the price-system is intrinsically and increasingly non- self-liquidating. It lacks the consumer income required to liquidate the financial costs of production incurred in any and every costing cycle.
It is fundamentally awed and any attempt to correct this intrinsic and growing defect by any form of taxation and/or redistribution, or charges which add to costs, is doomed to failure. It is impossible to make a sufficiency of an insufficiency by increasing or redistributing or deferring the deficiency.
Obviously, were it not for an intervening factor the economic system could not function. That factor is ever- expanding debt, i.e., new money created and issued in the form of loans which constitute an ever-compounding debt which is an ever-growing inflationary financial mortgage which must be charged endlessly to future cycles of production.
Society as a whole can live only by continuously mortgaging its future and/or producing new wealth in order to earn the financial incomes to allow purchase not of the goods currently under production, of which these incomes will be a cost entered into their final price, but of goods produced in a previous costing cycle.
The price-system is out of sync and the economy is static—rather than dynamic as would be the actual case in a physical economy unhampered by artificial and arbitrary financial restraint. There is an ever- narrowing financial bottleneck intervening between production and consumption.
From a Social Credit perspective, in accord with C. H. Douglas’s analysis of the price-system, his discovery of its major aw and his remedial recommendations, the existing situation is entirely unsatisfactory. A continuous new ow of purchasing-power is absolutely necessary but it must be introduced extraneously to
the functioning price-system without creating new financial costs so as to balance consumer incomes with the current prices of new consumer goods—thereby formally to cancel the financial costs incurred by industry while enabling full distribution of completed goods awaiting sale, without adding new financial costs or debt obligations in the process.
The physical costs of production are fully met as production takes place and the financial system must accurately reflect this elementary and irrefutable fact.
Currently the banks provide a continuous, if unreliable and inadequate, stream of financial income in the form of credit constituting a expanding mortgage on our futures. They fraudulently claim ownership of this financial credit which they create to monetize the community’s real wealth—which latter they do not create. They do this by authority of enabling charters issued and approved by ill- informed, complicit and/or corrupt politicians.
What Marx would do by expropriating the physical means of production directly, the banking system accomplishes indirectly by appropriating the communal capital or Cultural Heritage through legerdemain and perpetually growing fraudulent nancial debt claims, which the incessant labours of mankind are incapable finally of *requiting. (*recompense)
The concepts of universal National (Consumer) Dividends and falling consumer prices are entirely appropriate, indeed entirely necessary, in the context of the rapid improvement in production efficiency achieved by the marvellous advances of modern technology with consequent growing--and highly desirable--displacement and elimination of labour as a factor of production.
These measures must not be financed, however, by any means that adds to existing financial costs of production, but rather by means of credits issued without incurring debt, and which liquidate outstanding excess costs already incorporated in nal consumer prices.
By this standard, existing programs which are financed by any levies such as natural resource royalties which enter into future costs and prices do not fulfil the requirements of realistic financial cost-accountancy and economic policy. (emphasis added...ed)
- - - Wallace Klinck, Canada
Watch and listen:
Robert Klinck - “Economists’ Failed Professionalism”