Beyond Billions for Bankers and Brokers
If we don't bailout Wall Street, what happens to us?
This bailout is big, not just financially but historically, too. The $700 billion from the Treasury is to start; it could easily reach many trillion before they’re done. And it’s on top of $900 billion already from the Fed. If Americans can use this crisis to correct their economic system … Either way, after the expenditure of so many trillions, the world can never be the same again.
by Jeffery J. Smith, September 2008Here’s gall: People already way too rich easily demand money that does not belong to them -- or they shut down our economy.
Here’s inferiority complex: The public cannot even demand money that does belong to them -- society’s surplus.
What’s that about a surplus? It’s the market value of things that take no labor or capital to make, things like land, resources, EM spectrum, things we pay trillions for each year -- into very few pockets. Now the owners of those pockets want even more money, and all that the people insist upon getting are some regulations. Wow. Can I negotiate my next raise with you?
Trillions for regulations? What’s their lifespan? Three business cycles, max? Maybe even shorter this time, since the public is a pushover. You want banks to disclose their health to the government? Regulators are not the depositors or investors. Let the public know; make banks include their bottom line in their advertisements.
Some say, if we can afford to bailout Wall Street, we can afford to bailout subprime borrowers. Make the prudent rescue the imprudent. Fortunately, there is a way that’s charitable, fair to the prudent, and won’t further enrich greedy banks. How? Require any lender before foreclosing on a borrower to first pay all the debtor’s property taxes, both past due and a year into the future. That’ll give leverage to homebuyers, since the crisis is: bankers can’t qualify for more debt.
When loans get renegotiated to smaller principals, then the price of housing, actually of land, can keep dropping. Which it must, for the economy to get back into gear. People must afford somewhere to live and work before they can play and spend.
Other public programs on do-gooders’ wish list: Medical insurance, eventho’ competition among doctors and a straight cash dividend to everyone is better. Rebuild bridges, eventho’ those funds should come from surrounding land values, pushed up by better infrastructure.
Say we saved our money and laughed in Wall Street’s face. How do we safeguard our economy? Anything that could go wrong -- or worsen -- deal with it directly.
* Got something against CEO salaries based on pushing dishonest loans? Then reform limited liability so those bloated salaries can be reclaimed in court.
* Fed up with inflation? Curb the government’s deficit spending, rebalancing new notes with output.
* Struggling on low wages? Repeal taxes on income under $30k, strengthening purchasing power.
* Anxious over unemployment? Make it cheaper to hire. How? Make the Treasury get back to issuing its own notes, which would compete with Fed notes (the ones in your wallet). The competition will force down the lending rate, now a hindrance to business.
* Worried about scarce credit? Reform legal tenure laws to recognize community currency; grow your own money tree.
In Chinese, crisis means danger plus opportunity. Get to the root. Lose your reliance on real estate. Each of us banking on particular properties is what fuels speculation, concentrates wealth via mortgages, and exacerbates the business cycle.
To avoid all that yet enjoy security from land, we must benefit together. That is, we’d all pay in land dues (or land taxes or land use fees or deed fees) and get back “rent” dividends (a la Alaska’s oil dividend). Even owners of the prime locations in the best neighborhoods, of downtown blocks, of oil fields and mines, of broadcast frequencies, of patents and copyrights and other “flags” that stake out parcels in the field of knowledge, would pay dues into the public treasury while all residents would get back an equitable share.
Places that have done even just a little bit of this geonomic shift have advanced. Why? When paying a “rent”, sellers are more eager to deal and buyers can afford only a lower price, so owner-occupancy rises. Owners quit withholding prime sites and infill cities, which contracts sprawl. The development generates jobs and new business. Government can afford to quit tax buildings, sales, and income. And that’s just the short list. A key gain is people learn to feel confident enough to stand up to extorters.
If Wall Street wins this round, won’t they go back to doing what they did before that created this crisis, create another one, and be back for more? Then we’ll have another crazy opportunity to transform the system. By then, may we know better than to deal with bankers, at least not ones wearing a tie. Of course it’d be better to not wait so long. Let’s trump their gall with our newfound self-esteem, having learned that the fairest way is also the safest way.
Jeffery J. Smith runs the Forum on Geonomics.
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Getting to the Heart of America's Economic Crisis
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