Prosperity from Geonomics
Exactly how would you suggest that everyone in the world become prosperous, while avoiding all the traps of injustice, pollution and violence? It's a challenging question, and Jeffery Johnson Smith takes it up right now.
by Jeffery Johnson Smith
President, The Forum on GeonomicsThe better life
What if the poor had more goods, the middle class had more time off, and the rich had more justification for being that way?
What if wages were higher and prices lower? What if taxes were lower and the return from government higher? And all four trends just kept on getting better?
This economic good life is not utopia. It's the consequence of economic justice. Were we to win fair distribution, we'd motivate efficient production – and sufficient consumption – automatically.
Winning economic justice requires us to change the law, and that requires us to change many minds. A critical mass must come to realize what constitutes property: what's yours, what's mine, and what's ours.
For an individual, property is what you make or buy from its maker. But that's not the entire universe of property. We as groups have property, too.
Our society's property is not stuff, like buildings, bags of coins, or stacks of boxed bacon. It's not a stock at all but a flow, a flow of money. The primary yet least conspicuous public property is the money we spend on the nature we use.
What's the three most important things in real estate? Location, location, location. Yet no one, not any owner, made land or location or its value. Society didn't make land either, but we together in synergy do make locational value.
And it's not just land that we value, pay boatloads for, and did not produce. There's also subsurface resources like oil, supra-surface resources like the EM spectrum, and government granted privileges like the corporate charter. In sum, any economic advantage that nobody made, no single owner should reap the benefit of, exclusively.
Presently we pay the wrong people for the advantages conferred by nature or society. Instead of paying private owners, when we pay for a never-produced advantage like a location, we should pay everyone we exclude from that advantage. That is, our neighbors, our society.
We could simply run around the neighborhood stuffing dollar bills in mailboxes. Another way to compensate neighbors is to pay Land Dues in to the public treasury and get Rent Dividends back from the public treasury. We'd pay in an amount equal to the value of the location we claim and get back an amount equal to how much everyone else gets back.
Getting back a Rent Dividend, we'd not need to get welfare, corporate welfare, public schooling, socialized medicine, etc; we could afford to choose our own teachers and doctors. And recovering all Rents for all advantages, government would not need to tax anything that moves, like sales, salaries, and structures (tho' they little move). Governments could lose taxes and citizens could lose subsidies, if we shared Rent.
This is the policy of geonomics. Replace taxes with Land Dues and replace subsidies with Rent Dividends. Geonomics would let us all prosper. Watch how.
First, to pay the Land Dues, owners of prime sites who'd been speculating – keeping good locations idle or underused – get busy. As they develop their land (usually central city sites), they offer people jobs, which raises both employment and wages, even among entry-level workers. So now the poor can buy more needed stuff.
Second, nicely, stuff costs less. It's no longer taxed, neither its being made nor its being sold. And having to pay Land Dues, producers feel more pressure to win and keep customers, increasing competition among themselves, which also lowers price. Plus, to avoid Land Dues, investors switch their portfolios from mere extraction of resources to finding ever better ways to get more from less, again dropping prices. With the cost of living falling so much, the middle class need not work so long; they can shrink their workweek, so others now without jobs can work more. With full employment (at less than full-time), that'll pump up wages, too.
Third and fourth, “death-pledges” (mortgages) and taxes disappear. Most people now spend most of their hard-earned pay on housing – and the part that's going up is the underlying location, not the building getting older and more worn out – and on taxes. Under geonomics, people would no longer pay taxes and would redirect the land portion of their property payment – whether mortgage or lease (“rent”) – to their society, via their government. So most people save; their Land Dues would be much less than the taxes they now pay. When you factor in the Rent Dividend, they save even more, no contest.
Some citizens, of course, will pay more: owners of more than one home, owners of land-intensive businesses like Walmart with its huge asphalt parking lot, owners of oil fields or TV stations. Those guys, the ones now calling the shots and catching the “tax breaks” (actually, “rent breaks”), they'd pay more, but no more than what their portion of nature, our common heritage, is worth. And once they pay it, they can justify keeping any profit they make, untaxed. Under geonomics with its full-value fees for claiming nature and taking privilege, even a good-sized fortune would be paltry by today's outrageous standards.
What a system! The income ceiling comes down. The income floor goes up. And prosperity spreads; everyone can afford the things everyone needs and longer leisure. All we need do is axe taxes and subsidies and instead share society's surplus, the Rents we pay for the advantages bestowed by nature and society. Once we finally figure out property – both private property and public property – we'll be swimming in prosperity.
Copyright 2004 by Jeffery J. Smith. All rights reserved. No part of this material may be reproduced or transmitted in any form or by any means, electronic or mechanical, which includes but is not limited to facsimile transmission, photocopying, recording, rekeying, or using any information storage or retrieval system, without giving full credit to Fred Foldvary and The Progress Report.
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