California Gov Candidate: Develop the Coastline to Fund Income for Everyone

“National Parks would be left untouched; I’m not going to build a mall in Yosemite,” gubernatorial hopeful Zoltan Istvan assured me, explaining his plan to fund a universal basic income for all Californians.

He believes development of public lands is the best way to solve the economic crisis of the rich getting richer while the poor grow poorer. And he claims it could bring a paycheck worth almost $60,000 a year to all Californians.

Universal basic income (UBI) is often touted as solution to poverty and a way to soften the blow automation brings to an evolving economy. It's not just a liberal utopian pipe dream; some conservative intellectuals and economists endorse this idea as well. Many argue that a basic income would not only lift people out of poverty, but it could also save governments money in the long run by eliminating social programs.

The idea is to simply give constituents a monthly check to cover their basic needs. Communist heresy? Maybe not.

Capitalism at its most basic is this: Workers provide labor in exchange for money they can use to buy goods and services produced by other laborers. But what if automation reduces the number of jobs we really need? And constraints on natural capital limit the number of goods we can produce? The government could offer grants to keep the wheels of the economy moving.

Some economists counter that such talk is merely Silicon Valley claptrap: a leisure-induced utopia that only sounds good in theory.

But Zoltan Istvan, a former journalist and current real estate developer, thinks George McGovern was on to something with his “Demogrant” proposal.

Istvan is running for governor of California as a Libertarian on a platform of universal basic income. He proposes funding this program through leasing California public lands -- the coastline in particular.

Earlier this week, TriplePundit spoke with Istvan by telephone to learn a little more about his candidacy and his big idea, which goes against decades of political convention on the nature of work.

To Istvan, the logic behind his proposal is simple: “Like the Titanic, capitalism is sinking, but few passengers are wondering yet if there are enough lifeboats.” A UBI could provide that safety net before this ship sinks, or before social upheaval foments due to the lack of job opportunities.

According to Istvan’s math, 45 percent of California’s land mass is government-owned, with much of it sitting undeveloped. Assuming that land was worth a middling estimate of $15 trillion, if 75 percent of that land was leased, the payout to each household would be almost $5,000 a month – or about $57,500 annually: enough to transform the lives of the approximately 40 percent of Californians who live near or below the poverty line.

Compare that figure to the Bureau of Land Management (BLM) which, according to its own data, generated about $74 billion in revenues in 2015. Had those funds been funneled directly to American families, 126 million households would have scored about $600 a year.

That figure does not include the lands leased by other divisions of the Department of Interior, but there is still a huge difference between Istvan’s numbers and what the BLM reaps each year. So what’s going on?

“Remember that the BLM has a government mandate to preserve federal lands,” Istvan said. “It’s not as if we have a bunch of capitalists making money off of these public lands. Those running BLM don’t have a mandate allowing them do anything with the land, as conservation is a huge priority for them.”

But what lands would be leased out to private enterprise? After all, some lands -- including areas of the Owens Valley, northeastern regions of the state such as the Modoc Plateau and the Mojave Desert -- are too isolated to easily develop.

Istvan says the real money lies in California’s coast, which he believes should be open to development.

He said that during a recent drive to Santa Cruz along Highway 101, it hit him once again that the stunning seashore could be used to facilitate economic growth. Instead, much of that land is controlled by the California Coastal Commission, which he said was analogous to a “crime syndicate.” That tight control of the land exacted by government agencies, from Istvan’s point of view, is coming at the price of denying many Californians the economic opportunities they deserve.

“Having been a real estate developer, I can tell you it’s almost impossible to build along the coast,” he said. The result has been the tripling of home prices in areas open for development.

“We’re sitting on hundreds of thousands of acres, worth $500 billion to a trillion dollars,” Istvan insisted, “and that’s land that could hit the market in one to five years. We just don’t have any more oceanfront property going to market.”

I asked Istvan if he was comfortable saying publicly that more of the California coast should be primed for development, and he gave an unequivocal yes.

Therein lies one of the largest challenges for his campaign to gain traction: To many of the state’s residents and politicians, the idea of turning wide open areas of California coast into cities and housing developments is a non-starter.

Istvan made it clear that if he were to be elected governor, such reforms would not happen overnight. After all, the federal government will not quickly relinquish control of the lands it manages to the Golden State.

Then there are the stubborn realities of economics. “Could you put this all land up for sale immediately?” he asked rhetorically. “No, because prices would plummet, as there would be too much supply on the market.”

Just as the automation of the American economy would not occur overnight, Istvan sees his agenda as a step-by-step, incremental process. “Yes, my numbers are pretty optimistic, but they aren’t painting the whole picture,” he explained. “I would try to implement this process over time. Let’s take, say 10 percent of these lands at first, and see who wants to lease it. After two or three years, if these lands generate the revenues we want, we can then look at other lands.”

Istvan made it clear that there would be careful stewardship of these lands, and attempted to negate any outcry from environmentalists from the onset. “We’re not going to have some Chinese company just come in and ravage the land for pure profit,” he said.

But he also noted that one problem with public lands is that many people simply do not have the time, or money, to visit these areas for their recreational and sightseeing opportunities. But with a UBI, people would have more time to visit such places – and therein lies another example of an economic multiplier he said could take off if a guaranteed income were made available to all citizens.

Rather than shy away from the downsides of developing California's treasured coast, he insists the alternative is worse. Absent government intervention, automation will march on, leading to fewer jobs and greater poverty. A basic income, paid for by the development of  publicly owned land, would actually free people of the financial stresses that hold them back. Without the need to struggle for minimum wage, the population can be transformed into more productive and happier citizens.

“As a libertarian, it’s not my business to tell people what to do,” continued Istvan, “but what I want to do is make it clear that we don’t have to have poverty in America, and that we can give everybody the opportunity that they seek, including education or starting a business.” And along with that steady stream of cash, many of California’s social programs, and the administrators that run them, would no longer be necessary.

Giving people a guaranteed income, said Istvan, would not create a class of “lazy” or entitled people, which has long been the argument against social welfare programs. “People that get a little money, in fact, become more prosperous - money has this habit of making people even more successful, as the majority of people will spend it on something that enhances their wealth, not on something frivolous, because they will want more.”

Instead of frittering their time away as these guaranteed checks come in, Istvan said many citizens would ask themselves, “Why should I be only working or middle class, when I could be upper middle class?” That's the argument behind the wildly successful earned income tax credit program.

As we wrapped up our interview, I quizzed Istvan about a similar proposal that has been floated in Washington, D.C.: a revenue-neutral carbon tax and dividend, recently endorsed by leading climate scientist James Hansen, which would pay a small amount annually to U.S. citizens. Istan has, after all, written for National Geographic in the past (he’s considered a global pioneer in the sport of volcano boarding) and is often described as an environmental journalist.

He was at most lukewarm about the idea. “I’m not sure that the government could pull this off, as their hands would be the pie,” he explained. “And decreasing the carbon footprint may not necessarily be helping the environment. But taking on measures to boost the economy, such as green engineering, nanotechnology and geoengineering, could help solve our problems. I’m a big believer in that we need more of these technologies, not less.”

Of course, many of these emerging technologies are years away from development. And as far as managing a universal basic income, California’s state government would have to manage the distribution of those funds, just as the Social Security Administration would have to collect and then redistribute a future carbon tax and dividend. But during our interview, Istvan made it clear the private sector, not the government, is the ticket to curing both this state’s and country’s social ills and environmental challenges.

This history of third parties in the U.S. is the biggest obstacle to Istvan’s candidacy. Over the years, both Democrats and Republicans have legislated themselves into power, making it difficult for third parties to break through. At best, a third party’s ideas are incorporated one of the two main parties: witness the populist People’s Party of the late 19th century; many of their ideas were adopted by the Democratic Party of William Jennings Bryan. Ross Perot’s demand for deficit reduction was coopted by Bill Clinton in the early 1990s. George Wallace’s presidential campaigns in 1968 and 1972 eventually became the tactics behind the Republican’s dominance of the presidency through the 1980s. And bottom line, the left will shudder at the thought of anything smacking of selling off public lands for private profit; the right will not stand for any form of income redistribution.

Nevertheless, 21st century problems require 21st century thinking; and if the major parties relented and granted Istvan a podium during next year’s gubernatorial debates, he certainly would be fascinating to watch. He’s engaging, optimistic and gregarious without being overbearing. Near-octogenarian Jerry Brown has arguably been a steady hand the past 6 years; but in this volatile era of Trump, anything can happen in next year’s campaign, even though the Republicans to date have no one, and the Democrats’ bench is full of names but thin on ideas.

Image credit: Zoltan Istvan