Read Progress and Poverty as a teenager, did some further reading on the topic, and became a convinced Georgist. He went on to be graduated from high school at the age of fifteen, to earn a B.S. in Physics and a Ph.D. in Materials, and to end up working for the U.S. Patent Office, which is not responsible for his extracurricular opinions and activities. He is a Georgist tutor for the Henry George Institute, on whose board he now serves; he is also a long-time director of the Center for the Study of Economics, and a relatively new addition to the Robert Schalkenbach Foundation’s board.
There’s an article in The Wall Street Journal (Monday, September 30, 2013, p. A18) about Japan’s attempt to regulate its economy, titled, “Japan to Pair Tax Rise and Stimulus.” In a saner world, it wouldn’t be an article in the WSJ; it would be an article in The Onion.
Japan has a high and increasing national debt, thanks largely to its attempts to “stimulate” its way out of the lost decade following the bursting of its real estate bubble. The Japanese, whatever their faults, seem at least to see a little further ahead than some of our politicians, so they’re trying to raise taxes to stop going further into debt, which may be a defensible policy. But they’re doing it by raising the sales tax from 5% to 8%, which is an indefensible idea (note page 4 of Professor Gaffney’s essay for a paragraph about Japan).
Apparently someone is bright enough to grasp that raising the sales tax is the next worst thing to running the economy through with a naginata, so they’re trying to counteract the damage by stimulating — or I should say, “stimulating” — the economy. And according to Keynesian doctrine, the way to do this is by government spending. The government will hire people to repair the infrastructure or something, these people will spend their money to create jobs for more people, and the entire economy will flourish.
If it could work, it would have done so by now; the Keynesian view of stimulus neglects the problem that the money which the government spends to stimulate has to come out of someone’s pocket, one way or another, so there is an anti-stimulus to match the stimulus.
You might think that anyone outside an Onion story would be able to see this. You might think that people would react to this proposal for stimulus the way they would react to a proposal to make a blanket longer by cutting strips off the top and sewing them to the bottom to keep a sleeper’s toes warm.
Failing that, you might think that Japan’s economy were under the management of dull-witted children or certifiable lunatics. Or if you are more humble, you might think that Japan’s best economists — the learned men running the Finance Ministry and the Bank of Japan — must possess a superior understanding of economic questions that you and I lack.
But no. These are intelligent, educated men, who are presumably capable of good management in their private affairs. And yet, they do not possess a genuinely superior knowledge of economics, as witness the fact that for year after year, their attempts to restore prosperity have not worked.
They are acting like imbeciles because they have been miseducated into believing grossly mistaken ideas about how economies work, what causes unemployment and depressions, and how to cure them. The extensive educations which they may well possess in some respects are rendered largely worthless by their basic ignorance of land rent and the real causes of speculative bubbles and subsequent crashes. Being an expert in Keynesian economics is like being an authority on phlogiston chemistry or the Ptolemaic system of epicycles.
To avoid seeing more Onion like article in the serious financial press, we have a simple but immense and difficult task before us: We need to educate the world about Georgist economics.
an alternative to conventional land trusts. Just as it seems some functions should not be left to the market – private courts and cops invite corruption (while private mediation is fine) – just so some land should not be left in the market. That said, sacred sites do not make much of a model for treating the vast acreage of land that we need to use. So the usual trust model, which is anti-use and counter-market, can not apply where it’s needed most. Trust proponents worry about ownership and control – two very human ambitions – but they’re not central. Supposedly, we the people own millions acres – acres that private corporations treat as private fiefdoms – and conversely, the Nature Conservancy owns wilderness the public can some places use as parks. So, the issue is not who owns but who gets the rent – ideally, all of us.
a way to connect the dots. Making the cyber rounds is “The Cavernous Divide” by Scott Klinger, from AlterNet (posted March 21): “As the number of billionaires in the world expands, so does the number of those in poverty.” Duh. The yawning income gap is not news. Nearly every issue of our quarterly digest carries a similar quote. Yet the connection was worked out long ago by one of America’s greatest thinkers, Henry George, who labeled his masterpiece, Progress and Poverty. Techno- and socio-advances always enrich few and impoverish many. Yet progress also pushes up location values – the geonomic insight (is Silicon Valley cheaper now or more expensive?). Instead of taxing income, sales, or buildings, society could collect those values of sites, resources, EM spectrum, and ecosystem services via fees and dues, which would lower the income ceiling, and instead of lavishing corporate welfare, pay out the recovered revenue via dividends, which would jack up the income floor. Dots connected.
more transformation than reform; it’s a step ahead. Harvard economics students this year did petition to change the curriculum, in the wake of the English who caught the dissension from across The Channel. French reformers, who fault conventional economics for conjuring mathematical models of little empirical relevance and being closed to critical and reflective thought, reject this “autism” – or detachment from reality – and dub their offering “post-autistic economics”. Not a bad name, but again, academics define themselves by what they’re not, not by what they are, unlike geonomists. We track rent – the money we spend on the nature we use – and watch it pull all the other economic indicators in its wake. We see economies as part and parcel of the ecosystem, similarly following natural patterns and able to self-regulate more so than allowed, once we quit distorting prices. To align people and planet, we’d replace taxes and subsidies with recovering and sharing rents.
one of many words I coined over 20 years ago: geoism, geonomics, geonomy, geocracy, etc – neologisms that later others came up with, too. CNBC once had a Geonomics Show, and Middlebury College has a Geonomics Institute. If “economy” is literally “management of the household”, then geonomy is “management of the planet”. The kind of management I had in mind is not what CNBC was thinking – top-down. My geonomics is not hands-on, interfering, but hands-off, organic. It’d strive to align policy with natural processes, similar to what holistic healing does in medicine, what organic farming does in agriculture. Geonomics attends to two key components: One, the crucial stuff to track is fat — or profit, especially profits without production, such as rent, or all the money we spend on the nature we use. Society’s surplus is the sine qua non for growth, needed to counter death – not merely more, but sustainable development, more from less. Two, the basic process to respect is the feedback loop. These let nature maintain balance automatically and could do the same for markets, if we let them. Letting them would turn our economies, now our masters, into a geonomy, our servant, providing us with prosperity, eco-librium (to coin a term) and leisure, time off — a hostile environment for economan but a cradle for a loving and creative humanity.
suitable for framing by Green Parties. When Greens began in Germany two decades ago, they defined themselves as neither left nor right but in front. Geonomics fits that description. The Green Parties have their Four Pillars; geonomists have four ways to apply them:
Ecological Wisdom. Want people to use the eco-system wisely? Charge them Rent and, to end corporate license, add surcharges. To minimize these costs, people will use less Earth.
Nonviolence. Want people to settle disputes nonviolently? Set a good example; don’t levy taxes, which rely on the threat of incarceration, to take people’s money. Try quid pro quo fees and dues.
Social Responsibility. Want people to be responsible for their actions? Don’t make basic choices for them by subsidizing services, addicting them to a caretaker state. Let people spend shares of social surplus.
Grassroots Democracy. Better have grassroots prosperity. Remember, political power follows economic. Pay people a Citizens Dividend; to keep it, they’ll show up at the polls, public hearings, and conventions.
a new policy from a new perspective. Once your worldview shifts — so that vacant city lots are no longer invisible — then epiphany. “Of course! Why didn’t I see it before?” Once you do see the emptiness and what damage it does, how can you ever go back to the old paradigm?
a way to have everybody pulling on the same end of the rope. Last summer’s expansive forest fires shed light on growing class resentment in the West. Old loggers and ranchers rankled at the new urgency to stamp out the blazes that threatened the recent Aspenesque settlers. The newcomers expected working class firemen to make protecting their expensive homes top priority. (Chr Sci Mntr, Spt 7) The tinder for this envy? Rich people moving in bid up the price of land, making it hard to afford by people on the margin. The fault really lies with our system of privatizing land value. If this rising value were collected by land dues and shared by rent dividends – the essence of geonomic policy – who’d complain? The more people move in, the higher the land value, and the fatter the dividend paid to residents. Then people on the margin might go out of their way to invite rich outsiders in.
an answer for Jonathan of the Green Party (Nov 7): “What does ‘share our surplus’ mean?”
Our surplus is the values that society generates synergistically. It’s the money we spend on the nature we use: on land sites, natural resources, EM spectrum, ecosystem services (assimilating pollutants). It’s also the money we pay to holders of government-granted privileges like corporate charters. We could share it by paying for the nature we use and privileges we hold to the public treasury then getting back a fair share of the recovered revenue. Used to be, owners did owe rent (“own” and “owe” used to be one word). And presently, some lucky residents do get back periodic dividends: Alaska’s oil dividend and Aspen Colorado’s housing assistance. Doing that, instead of subsidizing bads while taxing goods, is the essence of geonomics.
Jonathan: “Is local currency what you mean?”
Editor: It’s not. Community currency is a good reform, but every good reform pushes up site values. That makes land an even more tempting object of speculation. Now, any good will eventually do bad by widening the income gap – until you share land values.
more transformation than reform; it’s a step ahead. Harvard economics students this year did petition to change the curriculum, in the wake of the English who caught the dissension from across The Channel. French reformers, who fault conventional economics for conjuring mathematical models of little empirical relevance and being closed to critical and reflective thought, reject this “autism” – or detachment from reality – and dub their offering “post-autistic economics”. Not a bad name, but again, academics define themselves by what they’re not, not by what they are, unlike geonomists. We track rent – the money we spend on the nature we use – and watch it pull all the other economic indicators in its wake. We see economies as part of the ecosystem, similarly following natural patterns and able to self-regulate more so than allowed, once we quit distorting prices. To align people and planet, we’d replace taxes and subsidies with recovering and sharing rents.
an economic policy based on the earth’s natural patterns. Eco-systems self-regulate by using feedback loops to keep balance. Can economies do likewise? Why don’t they now produce efficiently and distribute fairly? The answers lie in the money we spend on the earth we use. To attain people/planet harmony, that financial flow from sites and resources must visit each of us. Our agent, government, must collect this natural rent via fees and disburse the collected revenue via dividends. And, it must forgo taxes on homes and earnings, and quit subsidies of either the needy or the greedy. As our steward, government must also collect Ecology Security Deposits, require Restoration Insurance, and auction off the occasional Emissions Permit. And that’s about it – were nature our model.
Never put off until tomorrow what you can do the day after tomorrow.
There is no shame when you try and fail; there is only shame when you fail to try.
A clear conscience is usually the sign of a bad memory.
If a man does not keep pace with his companions, perhaps it is because he hears a different drummer. Let him step to the music which he hears, however measured or far away.
Henry David Thoreau
Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much higher consideration.
Clothes make the man. Naked people have little or no influence on society.
It is curious that physical courage should be so common in the world and moral courage so rare.
I couldn’t wait for success — so I went ahead without it.
If God is just, I tremble for my country.
Be careful about reading health books. You may die of a misprint.